I'm just starting my second year as a member, and I'd like to thank all of you for sharing your trading ideas and insight, and especially Phil of course for great all-around investing advice as well as trades! In addition to learning patience and profit-taking, I think one of the most important things I'm learning here is to stick to stocks and trades that suit my temperament. And wow, I had NO idea how hard it was to learn patience. I should say "practice" instead of "learn", because it seems to be a constant struggle. Phil, please keep reminding us how nice CASH is!

Jerseyside

Joined last year and and started profitably trading options thanks to everything I have learned here. THANK YOU!!

OnWisconsin

Hey Phil – I ignored your call to sell those AAPL $580s for $1 so not sure whether to thank you or not (just kidding) for my $5 winner. Actually I want to thank you from the bottom of my heart, that was an uncanny call.

TheChaser

I started with $250,000 in cash as of Oct 1 and have realized gains of $81,000 thru close of business. And that's in an IRA with no margin or naked trades. Whenever you are in Argentina or Chile I owe you a drink. I'm looking forward to it.

Denlundy

Phil, I've got to give you props on the ICE spread play. Tremendous call! I jumped in on Friday when you made the recommendation and closed out today. Nice 57% return ($2,300) over a mere 3 trading days! This is why I dig your site!

Samlawyer

Nice call on the QQQ puts this morning Phil. I bought 10 at .13 this morning for fun day trade. Just closed at .95. Sweet hedge for the day!

RevTodd64

Best day ever trading the futures, thanks to Phil's excellent call this am, and his "play the laggard" instruction. Well done Phil!

Deano

On Optrader's section yesterday he was asked how he works with AAPL as an investment. He replied that he just ‘plays with the covers'. I've got a separate portfolio where I use primarily this technique over the past 6 months. Up 60% The principles involved are stock selection, patience, patience, using covers to protect profits, rolling covers to maximize premium return, and exiting when covers are gone and stock price is high. Sometimes it's hard to remember where you learn to do this stuff, but much of it is from integrating principles I've learned here with thing I already knew. Thanks for the help on this, Phil and others.

Iflantheman

You guys gotta give it to phil–the voice of reason yesterday, last nite and this morning.

Corleone

Phil, Thanks for the long calls@ $ 85 on AAPL. A quick $4900. Paid for my subscription!!

Newthugger

Speaking of the "Man Who Planted Trees", it really works. I bought BTU back in March at $49.87. I practically bought it at the tippy top. However, I soon afterward found this site, started learning Phil's methodology(and those in the strategy section) and began selling calls/puts regularly against my bad position. As of yesterday, I still own the original 100 shares, but have brought my basis down by over $11.00. Couldn't be happier, what started out as a really bad entry, I have managed to work down to a good basis. Had I not watched that video and learned your system, I would sold out of the position, and been kicking myself for making such a bad entry.

Hoss

Phil thanks. You never cease to amaze me with your thoughtful perspective on a myriad of different issues and challenges. It's kind of an embarrassment of riches since I joined this board a few years back. The ride from Dow 9,000 or was it 8,000? up to Dow 15,000 seems hard to believe. I wish I could have it all over again, except with the capital I have now.

Winston

Phil - I just referred 10 people. Last week was a 50% gainer for me. There are companies that want to sell mentoring service for thousands of dollars. This is far better of a deal with very good advice.

Steve

Phil - Thanks for the welcoming gift of the POT at a buck
Just paid for this month and my membership is not even 24 hours old!
looking forward to many more - bk

Bjkeck

Why were the analysts wrong?
If I were a Japanese investor who purchased US stocks prior to November at Y80 yen to the dollar, with the US market up an average of 15% or more and upon selling the asset I covert dollars to Yen, also realizing an additional 25% gain (one dollar now converts to 100+ Yen rather than the 80 I used at time of purchase), I think I would be unloading US assets also.
But analysts never do the math in their articles nor very rarely bring up or discuss the ramifications of currency fluctuations. I don't include Phil in this group as this is a valuable lesson I am learning from him.

Denlundy

Phil: Once again thanks for those inciteful comments, and the old links to Sage's portfolio management (I hadn't read before). I'm an experienced stock trader, but over the last 3 or 4 months have come to appreciate options trading here at PSW, and the consistency of your many premium-selling strategies. It is liberating to have to worry less about getting direction right and being able to generate 5% MONTHLY returns with close to delta-neutral positioning. Much appreciated!

Neverworkagain

I have learned more about options in the past 2 weeks as a full PSW member that the previous 5 yrs of making more bad than good option plays. The educational material alone is worth several times the price of admission. I have had an expensive education on what not to do- what is past is past- I am looking forward to profitable/fun future.

Pstas

Thx Phil. Lightly moving in the bullish direction. Took PFE for $14.35 and sold the Jan 11 C/P for $2.85 giving me a net entry below Mar 09 low. And I bought back those calls on BTU and JPM I asked about the other day and am leaving them uncovered for now, so feeling better. Still just learning the rhythm.
In the three months I have been using your system, my little portfolio is up 9.9%, so not only am I learning, but I am APPLYING that knowledge, and it's paying off. Thanks.

Hoss

Simply the best blogger with the greatest group of members a person could surround himself with on trading day. I've been trading for quite some time now and the insights & suggestions offered by Phil and the members keep me on a continuous learning cycle.

DDay

Maya, After years of being pretty good at picking stocks I still managed to lose almost as much as I made.All the reading Phil asked us to do as a new member (And everything else I can get my hands on lately) has revealed my Achilles Heal.Good stock picks do not necessarily make money. My problem was swinging for the fences. Since becoming a member Jan 1 this year and getting into to scaling into small trades I am amazed at the steady profit growth I have experienced already while not worrying about getting killed. And having fun doing it.. Phil, Thanks for the education, the help you give and the chance to learn more and get better. Also thanks to all the members who have answered the few questions I had when your not around.

Ricpar

I have been reading the "free" PSW for about a year and have always liked Phil's style as it closely resembled the way I like to trade (mostly naked put options). I have been a paid subscriber for about 5 weeks and I have been learning a lot from Phil and other members. I had made some money on Phil's "free" ideas in the past and I joined because one of Phil's futures ideas paid for my subscription within the same day (NG). Phil deserved my subscription and I was eager to learn more. I just did a quick tally and within the last 5 weeks the ideas that I chose to follow from Phil generated over 25K in options profits and 12K in futures profits (some of my trades were more conservative than what Phil's had suggested). I have a lot to learn, experience and confidence to gain. Thanks again Phil and Successful Trading to all.

Verreaul

I really would like to meet all of the posters here who seem like an intriguing bunch of intelligent, opinionated (without being obnoxious or condescending most of the time), and well spoken people. Not so easy to find in this age of instant gratification and me first attitudes. Usually this results in groups where misinformation is used to gain an advantage, or whatever it takes to beat the other guys. I love the one for all, all for one vibe here, sharing your best ideas and helping each other work together for a common goal, to be successful investors!

craigsa620

I have been with this site since the beginning and i have learned more the past 3 years than the previous 10. Information and great commentary are abound. The traders on the site are second to none and my portfolio has benefited greatly.

Kustomz

I would like to thank Phil and PSW crew for the insight and assistance (even the liberals).
In December I initiated long stock positions buying stock, writing calls and puts in AAPL, WFR and CHK (scaling in and out). Over the last week I have been trimming back my positions selling stock and taking out my callers and putters. I am now back to my initial 25% position that I started with in December. However this time, my cost basis on shares AAPL, WFR, and CHK is $0! With money to spare from those positions.

Texasmotion

Phil, did you by chance publish the weekly webinar on Youtube yet? I have been watching these and they are awesome. Unfortunately, I can't cut out of work to attend live webinars. Again, they are just awesome content – thank you.

jcpdx

Phil - I LOVE these futures trades at random hours! I wasnt able to get in on the 612 part but if I had it wouldve been 130$ (2.6%) on a 5k contract in less than 30 minutes. I know you have to sleep, spend time with fam, ect but Im just letting you know that your posts after hours/late at night has made people who followed them a decent chunk of change. Thank you, we appreciate it!

Jromeha

I picked up one of your recommended Gold plays, the July ABX 30s and sold the Feb 35s, which are now mostly intrinsic value. Is it time to roll these to the March 37.50s, or should I wait this spike out?

Bill Hoffman

Phil: I am always able to figure out your trades, including the rational when put in the right context of previous comments, etc. Keep doing what you're doing. It is much appreciated, and invaluable. Your hit rate of successful trades has been very high in my 1.5 months as a member, but even more importantly is your teaching of how to repair and DD positions that haven't gone your way yet. As with most members, we all have our ‘pet' trading interests, and learning how to think about trading is much more important than a specific trade, which could see the conditions behind it change an hour later. This is the classic case, of ‘Teach us to Fish', rather than just giving us a fish once in a while. Thank you!

Neverworkagain

Phil
Killed it tonight trading copper. Anyone who jumped in right after election is up about 75k on one contract!
Thanks

Kapella

WOW!!!!!!!!!!!! How will I ever do anything else in my life that will compare to the wild ride you get trading an ultra etf in the most volatile sector in the stock market the day before option expiration?

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Phil - I celebrate today, having reached my goal for the year, trading in sync with your education and guidance, of 1 million in profit. I learned a lot, achieved much, and am profoundly grateful. To be honest, when I set the goal I thought it was daunting, as I have for many years been an investor in equities but did very little with options. Learning and doing has for me been a blast!
I reached my goal by following Phil's strategies - lots of Buy/Writes, covered calls on equities , naked put entries for income production. I did it with 2.5 mil and kept 600,000 in cash in case I got in trouble. I concentrated on stocks (many of my own choosing) that had decent dividends and wrote front month calls against (OTM) which has worked well in this market run. 25% of my gain is in dividends and premium selling, with the balance in appreciation.

Gel1

/NKD- Kownichiwa Cowboy!! One week of patience and scaling in and out pays off. This is a testament to Phil's fundamental analysis with the PSW technique. Thanks Phil.

JohnO

Phil, I don't know how I can thank you enough for your guidance this past week. I'm up significantly in my portfolio and I've never been so relaxed watching the market panic. Thanks once again for being here for us.

thechaser

I must give kudos to Phil for changing my way of thinking. I'm a gambler by nature and used to just play the indexes with 3x etf's… well I still do, but the options give far better returns than I ever dreamed of. With these wild swings I've been catching 50-100% winners in days.

Mkucstars1

I cannot believe the success I have had in the last 6 months because of what I have learned here! It has been truly life changing. It's like the old adage about teaching someone how to fish instead of just giving them a fish. Thank you Phil, I am forever grateful and hope I have helped someone else along the way.

Craigsa620

hil, I hit my targets for the year in my 401K (thanks in no small part to your site), so I cashed out of all positions a couple of weeks ago. Feels good... I'm conservative with this money –looking for 2% per month, which i've been able to do… thx.

Lunar

Nice call on the QQQ puts this morning Phil. I bought 10 at .13 this morning for fun day trade. Just closed at .95. Sweet hedge for the day!

RevTodd64

That was a quick double on the DIA calls. trailing stop in place.

Kwan

Phil: Once again thanks for those inciteful comments, and the old links to Sage's portfolio management (I hadn't read before). I'm an experienced stock trader, but over the last 3 or 4 months have come to appreciate options trading here at PSW, and the consistency of your many premium-selling strategies. It is liberating to have to worry less about getting direction right and being able to generate 5% MONTHLY returns with close to delta-neutral positioning. Much appreciated!

Neverworkagain

Phil/ I hope the next 5 year bear market will be as much fun and as profitable as this 5 year bull market. For those who survived 2008/2009, and who imbibed the wisdom of PSW, what a time it has been. Good to have you by my side. I think you are selling yourself short – you need to triple your prices :)

Winston

Phil – just wanted to say a sincere thank you for teaching me how to offset, hedge, roll, and not panic. My account is up 10% in the last two weeks, and far from panic, this is becoming great fun. Thanks again,

Deano

I traded with Phil for approximately three years, and consistently averaged 80% returns yearly... some of which was due to my skills as a trader, but much was a direct result of what I learned as a member of Phil's site.... both from Phil, and the many talented traders that hang out there. Phil... if you are reading along... thanks, again for the approximately $ 3 mil I made tagging along with you.... in order to make you feel good for the work you did... I gave the government 50% of it all, so you made your contribution....

1234Gel

You guys gotta give it to phil–the voice of reason yesterday, last nite and this morning.

Corleone

Phil
Killed it tonight trading copper. Anyone who jumped in right after election is up about 75k on one contract!
Thanks

Kapella

I took $2 (up 133%) and ran on those USO puts, quite a bit more than the 20 you played in the $25KP. Thank you once again for turning a bad market week into a great personal week. You will be happy to know I am back to cashy and cautious with a few of your favorite longs into the weekend. Thanks to Phil, JRW and all the members who share their knowledge here.

Dennis

Thanks for the oil tip Phil: Bot & sold the USO May 29 calls for net $125. Not bad for few minutes work.

JWick1981

Every time I read Mr. Davis' market analyses and reports about his super profitable trades I feel admiration mixed with envy for the overall brilliance of this man, intellectual and verbal, his extraordinary savvy in the exotic art of options and, last not least, his moral passion with which he writes, even if in passing, about the darker aspects of capitalism.

RussianBear

Great call on expe Phil! Went long 50 shares and sold for a nice profit! And Great call on the nkd shorts as well. I didn't use a stop that tight and was able to cover for a $400 gain. Works been keeping me pretty busy and I'm jealous of all the members who are able to check in here more often! It's almost always quite profitable! Looking forward to Vegas!

Jromeha

I have been here for 8 yrs, and find it the best service out there. There are more eyes on the market in this forum than anywhere, and opinions abound. So, relax, and let the group help you out.

Pharmboy

I am struck by several things over the last few days. First is how level-headed we all are as Greece and China develop. Second is how very helpful it is to see the different trading styles we have, partly because of personal preference and partly because of different stages of development and education. It's very helpful. Well-done, Phil, to have developed this community.

Snow

Phil is a master at keeping you laughing, as well as making you money. - It is like " laughing all the way to the bank!"

Gel1

We are lucky to be in America and it is great to be part of the PSW tribe. Keeps me thinkin' and gatherin' the profits. ~ 42 % gain in my trading account year to date, which keeps me happy. Half to a third of the trading account is reserved in margin capacity that Is not committed. So, again thanks Phil and all of you other members.

Newthugger

Phil & Ephmen85: I hadn't thought about selling the covered calls. That should be the easiest strategy for me since I'm a beginner. Thanks a bunch!

JWick1981

Tesla et. al. – I've spent many months getting hammered shorting overvalued Momos, until, finally, I internalized Phil's message. Play small; give yourself plenty of room to double/move up the [lack of value] chain in terms of price. Play short; take [Musk's, eg.] latest bleep and sell the spike for a short time frame, because his tweets always come to naught. I've been coining money doing it, I just watch that premium melt away with scarcely veiled amusement. Swinging for the fences is for suckers [me, for a long time]. Those little gains really add up — $2k per week of evaporated premium and you could actually buy a Tesla by the end of the year!!

zeroxzero

I think that Phil is super, I am up 39.3% YTD. Thank you for your kindness and the opportunity to observe Phil from February.

KMisko

Hey Phil - writing to thank you!
First of all, and I know you have heard this a few times form some others - the portfolio updates you have done - with entries and targets and even margin reqs are invaluable!
I find myself understanding what is done here IN THEORY most of the time..however, there is a much bigger difference in placing and setting up the hedges properly than just understanding…This has been eye opening for me and Ifeel like I just took a major step in trading during the last week.

Bcfla

Phil - I followed your great pick re F and sold short the 1011 2.50 puts (200 contracts) and paid for the next 10 years of membership fees…. Thanks!

Gel1

Phil thanks. You never cease to amaze me with your thoughtful perspective on a myriad of different issues and challenges. It's kind of an embarrassment of riches since I joined this board a few years back. The ride from Dow 9,000 or was it 8,000? up to Dow 15,000 seems hard to believe. I wish I could have it all over again, except with the capital I have now.

Winston

Phil - Your logic not only makes sense, but it made a lot of premium profit for me over the past 12 months. I have recovered much of the massive equity losses of last year. My Monday play is the sale of long term puts on FXI. Love the premium!

Gel1

Hey I just did a nice options trade on LL for $800 (50%) gain thanks to this site, so… not bad for my first day! An hour of reading you guys and I already paid for two months subscription! Thank you!

While we did follow our plan and bought the F’ing dips yesterday – we did so cautiously as 3 of our 5 100% lines fell during the worst one-day drop since August 11th of last year. Not shown on this chart, the NYSE fell 2.1% to 8,325 and the Russell landed down 1.9% at 812. That means, other than the Nas – all of our indices bounced off and held their 2.5% lines and we can forgive the Nas because it was dragged down by AAPL, who was a BUYBUYBUY for us on the $340 line.

The 100% (off the March 9 lows) levels were discussed, along with the chart for the S&P showing our critical ranges, in this weekend’s "Fibonacci Rules – Sometimes, the Old Ways Are the Best!" so I’m not going to waste any time going over that but, for a quick reference, our 100% levels are: Dow 12,938, S&P 1,332, Nasdaq 2,530, NYSE 8,362 and Russell 800 (100% was 685). With the RUT so far over their 100% line, we used them as a key index hedge and the TZA’s banged right up to our target $13.50 into yesterday’s close and we took that money and ran ahead of the reverse split in our favorite Ultra-ETF this evening.

Clearly from the above chart, you can see how our logic pays off. Also, we chose the Dow for our long index for the same reason as they were lagging the others by a wide margin so we played the pair of Dow up and Russell down to cover some of our trades. Another place we took the money and ran was XLE, which was a $25,000 Virtual Portfolio trade in yesterday’s morning Alert to Members. We added 10 of the XLE March $75 puts at .85 and that could not have gone better as they ran straight up to $1.30, where we got out of dodge (you can see our volume enter and exit below) as it was enough to get us out of a previous XLE position that had hurt us all even, leaving our virtual $25,000 Virtual Portfolio nicely balanced at $27,511, up just over 10% in 15 trading days and on track for our goal of $100,000 by the year’s end. We just need to make more trades like this and we’ll be all set:

I mentioned EDZ was our primary hedge in the Morning Post and, even if you weren’t in the leveraged option play from Friday’s $21.40, they still "only" opened at $22.40 and topped out at $23.70, up 5.8% on the day. Who says I don’t pick stocks? I also mentioned our XRT short on the $50 line and, wouldn’t you know it, they had the nerve to run it back to $50 in the morning before falling to $49 by the day’s end, just 2.5% for you boring old stock players and I don’t even want to tell you how great that is when you are playing options! What else did I give away yesterday? How about the Dow Futures short at 12,350 – we got out as planned at 12,250 but, wouldn’t you know it – they ran back to 12,340 again at 10:20 on that silly spike and that was ANOTHER good entry opportunity for the ride down to 12,157. That’s good money at $5 per point per contract!

It’s OK to be bullish but you have to know how to slap on the defenses, like the above plays, when it all hits the fan. Don’t stand there like a deer in the headlights when the market moves against you. This reminds me of two oldie but goody articles written by Option Sage and I back in the Summer of 2007, when the markets were rocky and Sage wrote: "Don’t Just Stand There, Do Something" to which my counterpoint the next day was "Don’t Just Do Something, Stand There." Members will recognize both techniques can and are used simultaneously as we navigate these very choppy market waters and, if you haven’t read them before – now is a perfect time to get a feel for one of our core philosophies.

So, yesterday was fun and we only had a weak bounce per our 5% rule, which looks for us to get back at least 0.5% after a 2.5% drop. If it wasn’t for the dollar dropping 0.5% this morning, we wouldn’t even have that action in the futures so we need to be prepared for anything but we will want to play the Dollar to hold the 77.50 line and that may not be good for stocks and commodities in this morning’s trading.

Gold is right on the $1,400 line with silver at $33.25 and copper at $4.31 so this is about storing wealth (probably the wealth of Middle Eastern leaders) and not so much about some actual demand for metals. As pointed out by Penson Futures’ Sharon Johnson in this weekend’s edition of Stock World Weekly "I cannot say this clearly enough… This is not mill buying, mills CANNOT buy at these prices. If mills are not driving the price demand, this leaves only speculators as a source." How sick is that? They have pushed cotton prices to the point where the mills can’t afford to use it – yet the speculators STILL think they can make money on it. Can they be that dumb?

Of course they can! Oil speculators think we can afford $100 oil for a sustained period of time even though, just two years ago, it was a proximate cause for the collapse of the entire global economy. Cotton got real this week, falling from $210 to $170 (19%) since Friday – limit down two days in a row and they haven’t even come CLOSE to filling the volume of suckers that bought in since the middle of January. Once again we see my "Roach Motel Theory" of commodity trading proving out as speculators check in – but they can’t check out!

Speaking of roaches: Qaddafi (there are so many ways to spell it!) has vowed to fight a growing rebellion until his “last drop of blood,” as parts of the capital of Tripoli resembled a war zone and some of his followers and troops defected to the opposition. In Tripoli, bodies were left in the streets after an attack on protesters by pro-Qaddafi gunmen, the opposition National Front for the Salvation of Libya said. In the eastern city of Benghazi, where the protests began, the flag of the constitutional monarchy overthrown by Qaddafi in 1969 flew on streets and over several buildings and there were no security forces in evidence except traffic police, witnesses said. “In my opinion, the regime is over,” former Interior Minister Abdel Fattah Younes, one of those who defected, said on Al Arabiya television. “Most of the towns and tribes have said they back the revolution,” he said, while urging the Libyan army to join the rebellion.

This is why we got out of our short position on XLE – too scary with all this stuff going on but it will be a great trade again when it’s over, as will OIH shorts, as they got silly at $165 as well. Not yet though – China’s got their own "Jasmine" Revolution in progress but, shhhhhh – it doesn’t fit in with CNBC’s BUYBUYBUY oil premise so you won’t hear anything about it there. Also being played down is the American Revolution as labor finally finds a spine and begins to fight back. I don’t think many Conservatives have any idea that the Wisconsin unions gave in to EVERY single demand made by the Governor (to fund his $67M Corporate Tax Cut no less!) EXCEPT his demand to break up the union and THAT is what this is all about – Union Busting – pure and simple, good old-fashioned Union Busting as we spiral towards Third World America:

$1,250 means a lawyer working just 40 hours can make $50,000 or 66% more than the average Wisconsin protester makes in a year ($30,000). Why don’t these people JUST GET BETTER JOBS? Stop teaching and putting out fires and go earn some real money people. I’m sure there are plenty of spare people at McDonald’s or KFC who can stop by between shifts and teach your kids for $576 a week.

The chart on the right is from a great article called "How Rich are the Super-Rich?" and (spoiler alert) it seems like they are pretty freakin’ rich. To put it into perspective, our lawyer friend, even making $1,250 an hour won’t even crack to the top 0.1% (one in 1,000 Americans) unless he puts in a lot of overtime with his paltry $2.6M annual salary. Hell, the top 0.01% pay that much in fees at the club! No, it’s not exclusive – they’ll let anyone in who can pay the dues. This is, after all, a Democracy…

Speaking of Democracy – you’ll be glad to know that the median net worth of a US Congressman is $912,000, about 10 times the median net worth of the average American family. That is the House of Congress that is supposed to be representing the people! The top 10 Senators have a combined net worth of $2.8Bn and ALL of them voted to extend the Bush tax cuts. Perhaps this explains how THIS happened to America since the Reagan Revolution planted all these rich jackasses in power:

As you know, my pet peeve isn’t that the rich get richer (we just got richer yesterday!) but that the Corporations don’t pay their fair share of taxes – causing our entire deficit. Of course, that’s not how the brain-washed public that is taught by $30,000 teachers sees it because those same Corporations wash, rinse and repeat on our brains at a rate that commands, by the age of 30, 1,000% more of the average citizen’s time and attention than their entire academic careers. George Orwell never imagined that a society would develop that would WILLINGLY make television the dominant feature of their homes and would WILLINGLY leave it on virtually all day long to feed them an endless stream of Corporate Propaganda to the point where even this doesn’t make them get out of their chairs and riot:

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Thanks Phil for helping make this a much, much better year this year than last. Your tutelage has been so very helpful. Don't think I can say Thanks enough. And I thanks all the members here who were work hard in helping us all to become better traders, and I would say better people as well. The support many of you offered when we evacuated during the fire this past year helped me immeasurably.
Happy New Years to you all!

JBur

Thanks for the oil tip Phil: Bot & sold the USO May 29 calls for net $125. Not bad for few minutes work.

JWick1981

Phil, You were on the $ today with your calls almost exactly on the turns – Krap kuhn krup (Thai for thank you very much).

Jomptien

Phil – Not that you dont usually, but you have DEFINITELY earned your money this week. THe recommendations have been PERFECT. Selling into the initial excitement (MULTIPLE TIMES), hedges, everything. Im reading this when I get home from work and want to cry b/c I cant trade at work! I might have to start getting up at 3 AM though to catch those trades bc youre killing it then too! May you and yours have a blessed weekend!

Jromeha

I have been a "silent" member for the past year, and am 1,000 hours into the 10K hours of training (The last week is worth at least 500 hours!). Made lots of mistakes and misunderstood quite a few of Phil's calls, … some actually made money when reversed. The chat (Including the politics) is very engaging (Many great minds with international coverage), and a great companion, while nursing a trade gone wrong, through the night. The webinars (despite technical difficulties) are extremely useful. Thanks for your coaching … it has made me a consistently profitable trader, with a better understanding of what I do not know.

Aquila

I want to thank you for the FREE LL trade. I This was the first spread trade for me and promised to join your service if I made money. I closed the spread last week and will be joining next week when we return home.

Captain Mogul

Phil: That NFLX call was awesome. The speed at which NFLX options decayed was precipitous. The blow out spike that allowed me to double and roll my callers to 190(!) and the ridiculous 170 weeklies @3.50 a day away from Op-Ex. The gains I realized in that trade floored me when I took a long at my portfolio value on Friday. What a great way to start the 3rd Quarter.

Kinkistyle

As a fellow "low-end" investor I like Phil's Buy/Write strategy on solid stocks. Before I came here I loved to try to "figure things out" with very little success "TRYING TO FIGURE THINGS OUT"! I traded too much and fell in love with stocks that "should have done" what they didn't do. Now a majority of my accounts are in Buy/Writes suggested here or cash (waiting for a better time for more Buy/Writes). I use 15-20% of my total holding to short term trade and hedge. This is manageable with my full time job as a business owner. I have found Phil's system a more discipline way to achieve the returns I want without relying on my ability (more like inability to "figure things out").

DCalrk41

Maya, After years of being pretty good at picking stocks I still managed to lose almost as much as I made.All the reading Phil asked us to do as a new member (And everything else I can get my hands on lately) has revealed my Achilles Heal.Good stock picks do not necessarily make money. My problem was swinging for the fences. Since becoming a member Jan 1 this year and getting into to scaling into small trades I am amazed at the steady profit growth I have experienced already while not worrying about getting killed. And having fun doing it.. Phil, Thanks for the education, the help you give and the chance to learn more and get better. Also thanks to all the members who have answered the few questions I had when your not around.

Ricpar

I must add yet another paen to Phil's "cash and short" call, as my TZA shorts are past paying for Similac and Pampers and have now covered all doctors and Mt. Sinai hospital bills for young Charlotte, as TZA took the portfolio up 10%.

Zeroxzero

Dear Phil, I have followed along with your commentary and alerts and have been flabbergasted at your quick analytical skills and your journalistic skills to explain it clearly. In a little over three weeks I have cleared almost 1000.00 dollars and got an intensive education at the same time. I would like to immediately upgrade my membership. It is hard for me to follow all evening as I am in Tokyo but I can join you at the beginning of the market and read the next day.

Tokyolife

Phil/Eric/Cwan/Matt/Cap/etc.. - I've learned so much from all of you and want to thank you. I'm up 23% this month thanks to all of your advice - Thanks, guys!

Josiah

Against all prognostics (bears) Phil pointed in the morning the correct direction, and in middle of day he pointed the possible move to 2.5% Incredible… I'm starting to serious believe on the program trading and the human nature behind the programing those "trade-bots".

Spider

Market manipulation…. One of the things I've gained from this site is the concept of market manipulation. I never thought it was so prevalent, but now I know it is. I actually consider its effect when I make trades. Several days ago, when AAPL was moving toward 220 I sold 210 calls. My reasoning was that they will probably pin this month at 210. They came in big time as the stock moved ever closer to 210. I agree with Phil's comment that one of the things we need to do is find out what they are manipulating, and how, and hitch a ride. They are doing this with several equities. I've actually seen one article describing several equities that were being manipulated to pin at expiration each month, and describing how it was done, and of course Phil has described it well. In some ways it's easier to figure this out than it is a ‘normal' market behavior, and thus easier to make money in certain equities.

Iflantheman

Phil – just wanted to say a sincere thank you for teaching me how to offset, hedge, roll, and not panic. My account is up 10% in the last two weeks, and far from panic, this is becoming great fun. Thanks again,

Deano

Boring trading – Phil/ Thanks to PSW, my yearly covered-writes are on pace for 15%. Add the long puts and well over 20%… and I look at it once a day and never lose sleep over it. Actually doing better than my trading account at this point (Thanks, summer 2013)
Anyway, the point is that anyone with enough money would be wise to do the 20% – 40% stuff and do trading as a hobby…

Arivera

Phil// Cashing out of my LT holdings have been going on for over two weeks. However, I have elected not to cash all of the holdings including my AAPL, Jan 16 Short Puts at $470 and $480. Plus, I am being opportunistic in selectively putting on those positions for beat down stocks by selling 2016 Puts. That said, YTD harvested profits now stand at $135k on a current account balance of $683K or a 19.81% YTD return. Thanks for your expertise in teaching me how to be patient, be the banker, but also not being greedy, cashing out and harvesting profits.

IHS4GOD

Phil is a master at keeping you laughing, as well as making you money. - It is like " laughing all the way to the bank!"

Gel1

Phil- I want to let you know that you really helped me make some money this morning when I probably would have lost on my own. I was stuck in doctors waiting rooms most of the morning starting at 8AM. By following the game plan you laid out and using my smartphone, I went short on oil whenever we got to 61.50 and long at 61 waiting for the spikes ahead of inventory. When 10:30 rolled around I was out after selling longs at 61.60 a few minutes earlier. I went short at 61.75-61.80 and voila, rode it down to 60.60 or so. Thank you.

craigsa620

Phil: I am always able to figure out your trades, including the rational when put in the right context of previous comments, etc. Keep doing what you're doing. It is much appreciated, and invaluable. Your hit rate of successful trades has been very high in my 1.5 months as a member, but even more importantly is your teaching of how to repair and DD positions that haven't gone your way yet. As with most members, we all have our ‘pet' trading interests, and learning how to think about trading is much more important than a specific trade, which could see the conditions behind it change an hour later. This is the classic case, of ‘Teach us to Fish', rather than just giving us a fish once in a while. Thank you!

Neverworkagain

Peter D: great write-up for Short Strangles, Part 1, looking forward to Part 2, particularly the adjustment part.

Oxen (directly) and Wilkinson (indirectly) are making me a great day trader! Props to Andrew for another little nugget last night: HIG. $20 Dec calls paid 6% quickly this morning. And helloooo STJ - a few days, but nice pick nonetheless - esp with early cover premium.

Dstillwe

I've recently done exactly what Phil described. I upgraded my ability to trade the IRA acct. by transferring acct. from TDA to TOS. TDA would not allow spreads; TOS does. Neither will allow naked options. With spreads I am able to buy calls or puts several months out then sell front month calls or puts over and over. This allows me to collect premium, which is, of course, the goal. This wasn't an original idea. Phil put me onto it. Since the transfer I've substantially increased my performance in the IRA!

Iflantheman

I have followed along with your commentary and alerts and have been flabbergasted at your quick analytical skills and your journalistic skills to explain it clearly. In a little over three weeks I have cleared almost 1000.00 dollars and got an intensive education at the same time. I would like to immediately upgrade my membership.

TokyoLife

I took $2 (up 133%) and ran on those USO puts, quite a bit more than the 20 you played in the $25KP. Thank you once again for turning a bad market week into a great personal week. You will be happy to know I am back to cashy and cautious with a few of your favorite longs into the weekend. Thanks to Phil, JRW and all the members who share their knowledge here.

Dennis

The best play I made this year was PSW. Will renew my membership tonight. Looking for the same trading profit percentages next year, but will have an advantage from the compounding, and much better skills acquired from you and the many skilled PSW co-pilots. Thanks!

Gel1

Simply the best blogger with the greatest group of members a person could surround himself with on trading day. I've been trading for quite some time now and the insights & suggestions offered by Phil and the members keep me on a continuous learning cycle.

DDay

I have to thank you for excelling yourself during this past week. I have spent a good few hours going over your notes and comments and there are so many gems on repairing and rolling trades that I have been beavering away on paying special attention to my major positions and analysing them using your approach on Tuesday. Being able to look at a group of trades on the same underlying (in this case AAPL) and taking a detached view by assessing the impact of the underlying reaching different price points was extremely reassuring.

Winston

Phil fantastic call on the markets… I owe you BIG…thanks and have a great weekend!

Phil
I am in the position to re-evaluate and re-establish the proper downside hedges for what I have invested. I went through what I owned and determined the market where it traded (NYSE, NASDAQ, etc.) and the dollar value of the trade so I would know how much I needed to protect. Some questions came to mind. How do you calculate the value of a spread? I simply figured it to be the maximum amount I could lose on the trade (difference between the long and short). However, I did not not know what to do with sold puts. Is there a better way to do this?
The end result of my inventory was that I 60% cash 40% stocks. Of the 40% invested 56% were traded on the NYSE and 44% on the NASDAQ. The ETF’s I am looking at are QID and DXD. I can work out the percentages to invest, but I still struggle with picking the proper spread to protect against a 10-15% drop. When you get the time (even after close) could you help me construct the proper hedge. Your opinion on the ETF’s I chose would be helpful also. No rush because QID splits today and I am semi-protected with EDZ and VIX for now. As always thank you!

Phil/Hov
I am looking to get into Hov. The May $4 Puts can be sold for $0.40, if Hov continues down $3.60 would be a pretty good entry to start a buy/write or after the drop yesterday would I be better off just buying the stock now and doing a 2012 or 2013 buy/write? The account will be an IRA, but it is nearly all cash so selling puts is not a problem.
Thanks

Rainman: I did a buy/write last summer at 7.50 and was just recently taken out of the last few hundred shares. It’s a very well run company with lots of cash flow. Really smart management. Mostly rural landlines. Don’t know why it is down today. Wouldn’t mind owning it again at the right price. I might just pick some up today.

I have nothing to say except don’t be greedy on oil longs (now $97.02 in futures). $98.4 was the top yesterday and $97 is now the stop line and each .25 should be the new stop line. Things are too crazy to short them but maybe the dollar bounces and we can go long at the $95 line again.

The NYSE will tell the story first as they should test 8,362 (now 8,351) if we are going up and then the S&P would confirm the bulls are back in control. Otherwise, down is still the trend so make that trend your friend!

IWM $83 puts are $3 and make good protection with a stop at $3 (about the $81 line) and that’s the on/off level for those nicely liquid puts if we need them.

Failing to hold yesterday’s lows would be a bad sign too. Asia was down but not much but Europe is a drag with the FTSE down 1% (dropping all day), the DAX down 1.2% and the CAC down 0.5% – ALL turning sharply lower in their aftenoon sessions.

Europe is down because the weak dollar is bad for their exports and the ECB is talking about tightening now to fight inflation. If the dollar breaks 77.50 – that’s a sign of serious trouble there and, don’t forget, the weak dollar is propping up commodities and the markets so be careful around the EU close (11:30) when demand for dollars may pick up.

Inventory/DC – IN’m not sure what you mean by "value" of the trade. I assume you mean how much should you allocate? I think, in general, you want to offset the expected damages of 1/2 of a 20% drop. So if you have $40K invested bullishly but all those trades are buy/writes with 20% protection – you really don’t need to spend much to protect against an $8,000 loss. It’s not about how much you have in the NYSE or how much you have in the Nas – it’s about the sectors you are in and how closely they correlate to each index you are considering hedging against. You may be tech heavy but maybe that’s for a very good reason and that means you should still short the RUT, who are getting margin pressures from inflation that your tech stocks are more insulated from.

There used to be such a thing as sector rotation before TradeBots made every single index (and most stocks) move in lock-step with each other. Now it hardly matters what you hedge with as they all move together anyway. In any case – the best way to protect against a 10-15% drop is to sell calls against your bullish positions. Rather than being greedy and living in the Fed’s fantasy world where every stock gains 10% a month. Why not set yourself up for well-protected reasonable gains? Then you don’t need to waste money betting against yourself. If you cap a gain at 20% but don’t spend 5% hedging against a drop – then you really are making 20% instead of net 15%, right? Meanwhile, the cash you don’t tie up is always available to slap on a cover if things get bad but the chance of us falling more than 10% in a day when you have no chance to cover is one in 9/11.

So my question is (and you can analyze this in TOS or most trade platforms) – how much do you expect to lose on a 20% market drop. That’s question number one. Also, I hope I don’t have to ask but that 40% better not be 100% bullish as that, in itself, is a grievous sin against portfolio balancing.

HOV/RJ – We accept you, one of us! That’s a good plan to start an entry. Worst they can do to you is pay you 10% NOT to own it in May.

VXX/Dmci – Yes, we did those last month and they worked great. VXX bottomed out at $27.50 and I don’t see how we can keep not worrying so the April $29 puts at $1.65 are not a bad way to raise cash.

INTC/$25KP, DC – Yes to following through with our DD at .22 now. That’s 10 more March $22 calls at that price ($240).

Phil
You would slap me with sledgehammer and bar me from your site if I was 100% bullish! 8^) I only have two unhedged positions INTC and FAS from the 25k portfolio. So if I am mostly hedged, I don’t require long term hedges only short term ones when necessary? Makes sense and thanks for the lesson on the index hedges.

Good morning Phil,
I have from an old hedge 20 March SDS 24 puts (sold for 1.70) and 10 long June 20 Calls (bought 3.50)… I bought back the March 29 calls as they were almost worthless. What do you recommend now that they have gotten a little lift with these drop.
Thanks

DCTH is expecting the EU ruling in Q2 (late). They are in for a device application, not a NDA like the US. It is my belief that they will get EU approval based upon the data, but again, manufacturing, etc. is an issue. So, starting to accumulate in here is ok now. I am buying Sept options (ITM) and selling Jan 13 10 Ps for as much as possible, as one can drive a truck through the spread.

Bearish/Yshen – Just the momentum play on the IWM. They already made a quick 10% and pulled back to $3.20. Tomorrow we’ll see what the new TZA’s look like.

POT/Streth – I am not a fan of the Ags at all. Just like cotton – people can’t afford to eat at these prices. Something has to give so either prices start dropping or people start dying. While there may be enough Conservatives in this country to vote for option B, the rest of the World is not so "enlightened" and they will curtail the speculation – because it is not demand or lack of supply that is driving a 70% rise in food prices. Food prices spike on misallocations and those correct, usually over 10-week periods. We’re in week 10 since the Aussie floods began so make sure POT holds the 50 dma at $165 before gambling on them from here ($171).

TASR/JMM – Sure, they are a patience play and I like the Sept $2.50/5 bull call spread at $1.30, selling the $5 puts for $1.20, which is net .10 on the $2.50 spread that’s $1.50 in the money. Because the put is sold higher, the break-even is between $2.60 (net entry) and $5 at $3.80 – not much less than we’re at now but the advantage is that you make $2.40 if TASR gains $1 – so that is better than owning the stock at $4.03 and much better than selling the $5 calls against the stock, which caps your gains at $1.30 and better than the buy/write, which nets $2.53/3.77 anyway and then you have 2x assigned to you while the artificial only risks a 1x assignment.

You’re welcome DC – If you feel you are reasonably covered, you can just take a hedge when they are either cheap (like TZA has been lately) or when you think you need it (like the IWM puts today) if we are breaking below resistance points.

HPQ/Deano – I love them at $35 so selling the 2013 $35 puts for $3.20 seems like a good idea and then you can get aggressive and play the 2012 $45/52.50 spread for $2.15 and that’s a worst-case net entry of $33.95 with an $8.55 upside on about $5.50 of net margin if all goes well.

Oops – Athens is rioting again!

SDS/Amatta – Well, I assume, with your short puts, that the net entry was near zero and now you are up $1.55 on the puts and that means up net $2.60 on the calls (less whatever you bought back the callers for and the .15 for the puts). The puts are pointless and should be taken out at this point (.15) as they can really only hurt you over the next 4 weeks. If you need the hedge, then you can roll to the April $19s for .20 and sell the Apr $23s for .80 so net .60 in your pocket to move to that $5 spread with a $1 lower strike and you don’t even need short puts anymore. If not – why not just take the money and run since 50% in the hand is worth 100% in the bush!

AAPL/High – I have no doubt that IPad will sell that well. That’s only 30M actually – even without inflation. Laptop shipments (industry) were about 40M last year and those cost double so figure a 100M unit market by then with maybe 40% traditional laptops (maybe less) and AAPL has 1/2 the pad market (vs the 95% IPod market share).

Protection/Cnarb – That’s not good! Still, we had a long weekend with lots of turmoil and no POMO for 3 days – I think you should give the Fed a chance to work their magic and not chase bear plays, which may be about to reverse.

AAPL announcement upcoming. Hopefully they don’t disappoint. 3 Apr $355 calls at $11.25 ($3,375) can be covered with 2 March $350 calls at $8.20 ($1,640) for net $1,735 on the 3 longs ($5.78) and the short March calls can be rolled to the March $365 calls, now $7.70 and don’t forget you can also split them to 1.5x so many ways to win this one and good protection if we dip further.

Phil,
SDS,
No sorry I guess it reads as if I have the 20 puts… I have 20 of the 24 March strike puts (sold for 1.70 now 2.70) so a $2K loss and 10 of the June 20 strike (bought for 3.50 now 2.50, so down $1K).
So with this volatility and the market trending down I thought of keeping it but doing some sort of adjustment and selling something against the long calls (as premiums are higher now)…
What do you think about rolling the 24 Puts out to the 23 June for even and then selling the 25′s for $1. so I am even on the long ones and down $1 on the puts but gain one in strike? I don’t know it it makes sense now to keep 2x the short puts…
Thanks

Phil,
You had recommended the FNSR play:the Sept $39/55 bull call spread at $6, selling the $39 puts for $5 and that’s $1 on the $6 spread and worst case is you own them at net $40 (down 7%).
Do you still like them? What about this one now:
FNSR Sept 37/50 spread for net 4.20 selling the Sept 34 puts for 4 for net .20 on the 13 spread?
Thanks

FTR/Leon – I had a list of 5 E&P plays I liked yesterday (from Friday’s post). I see no reason to add FTR just because they sucked when the others still have pretty good entries (especially NFX and XEC, the others took off already).

ECA/Rev – Speaking of which! Very nice Rev.

EGLE/$25KP, Obur – BDI fell 1.69% yesterday but not so bad. We’ll have to see how things go but the market still looks weak into Europe’s close.

That’s it for the EU and it looks like FTSE down 1% (day’s low) – failing the 6,000 line, DAX down 1.5% (day’s low) – testing the 7,200 line, CAC down 0.8% (day’s low) – testing the 4,000 line. THIS IS NOT GOOD!

This is a picture of a Greek policeman. Think about what a thin line we are treading in our "civilization" when we callously starve out the bottom 90% of society.. Maybe I care too much about the people in Wisconsin and all the tens of Millions who are suffering in silence while the same kind of indignities are heaped on them while fat bastards on TV rant on about how lazy the mother of 3 with 2 jobs is but I think that we are pushing the lower class too far and, since we have shoved 50% of the middle class into the lower class in the past couple of year – they are now the majority of the people.

Well, maybe the policemen and firemen will protect us. Oops – they are on the picket line in Wisconsin…

Who’s going to come rescue the rich in America when the people wake up? The Republicans are cutting Veteran’s benefits too….

This is just nuts – it’s the kind of situation they will read about in history books 200 years from now and say "what kind of idiots couldn’t see that coming?"

TBT, UUP/Morx – Thanks, yes they are both cheaper entries today.

$200 oil/StJ – Case in point…

FAS/Wassel – No, that’s a fine adjustment but I would go naked on the long calls and wait to see if XLF can bounce off $16.50 (now $16.57) before selling the covers. Might cost you a dime but could make a lot more than that if we get a good bounce.

Wow, NFLX down another 5% today! CMG 5% too, PCLN and OPEN down just 2% – they are the champions (no inventories). AMZN splitting the difference, down 2.6%, BIDU down 3.5 – now do you guys see why I prefer to wait before freaking out about short callers?

XLE/Mampcs – Patience! Watch oil. They are at $98.30 and Brent is over $110. XLE includes multinationals like XOM so do you want to short XOM when half the oil they are selling in the World is going for $110 a barrel?

Morx- I hear you about the ouch! I was holding an oil contract yesterday with a GTC order of 97.50, I cancelled and sold at 95.65 last night bc I couldn’t sleep (especially after they said something about the ghadafi regime being hours away from crumbling. Woulda, shoulda, coulda….

Phil,
CMG, wow they are falling like a rock! Would you play a bounce? My short 280 callers are 75% there already… (selling some way OTM short puts or buying back and waiting for a bounce to resell them?

Approach the euphoria surrounding increased M&A activity with some skepticism.

In the fullness of time, it often ends up badly.

"History does not repeat itself; it rhymes."
-- Mark Twain

It is argued by bullish investors and strategists that the increased level of M&A activity highlights a greater appetite for risk assets, improving business confidence, a better lending climate and underscores the large cash hoards at the some of the world’s largest companies.
These arguments have merit. But so does the observation that takeovers are often done at or near the top of market and of the general economy.
History also shows that the popularity of companies and industries often peaks (and goes to the extreme) coincident with takeover activity in those areas.
Last week, in an case of impeccable timing after a doubling in the S&P 500 since March 2009, NYSE Euronext (NYX) announced an agreement to be acquired by the Deutsche Boerse.
Equally amusing was the previous week’s AOL (AOL) acquisition of The Huffington Post for a large multiple of sales, cash flow and earnings, and this happened after we had already seen an explosion in Internet (again!) and social network valuations — namely, Facebook’s recent Goldman Sachs (GS) funding at a $50 billion capitalization.
If history is a guide, both deals could mark that the end is near, in general, for the rise in the U.S. stock market and, in particular, for the outsized increases in Internet and technology sector valuations
I got to thinking about the large takeovers littered over the last decade, and I suspect the NYSE transaction and the AOL deal will end up as miserably as many other high-profile deals, most of which occurred at the end of a cycle and resulted in large writedowns or unprofitable transactions.

Time Warner/AOL Merger

"This is a historic moment in which new media has truly come of age."
-- Steve Case, Chairman of AOL

"The Internet has begun to create unprecedented and instantaneous access to every form of media and to unleash immense possibilities for economic growth, human understanding and creative expression."
-- Gerald Levin, Chairman of Time Warner

In early 2000 AOL acquiredTime Warner (TWX) for $180 billion in stock and debt in one of the largest media takeovers in history. That transaction, which ultimately resulted in the largest corporate writedown in history, marked the end of the Internet bubble. The Nasdaq subsequently fell by over 70%.
I was highly critical of this transaction and Barron’s’ Alan Abelson interviewed me on five separate occasions (from 1999 to 2004) in which I gave reasons for my pessimistic views. Soon after the merger, AOL became the largest short sale I ever made, and its shares ultimately declined from the $70s to around $10 several years later. Here is an excerpt of my criticism of the transaction from the first Barron’s interview I had on the deal in September 1999:

A few weeks ago, we offered, more or less in passing, some demurs on the outlook for America Online. Comes now Doug Kass, chief cook and bottle washer of a hedge fund called Seabreeze Partners, to weigh in with some reservations of his own. Doug, we should note, has been short the stock since it sold some 50 points higher than its current price of around 96. We should also note that’s one of the reasons his portfolio is up 60% or so this year.
Among the negatives he cites are: the recent sale of 4 million shares by insiders; the fact that PC manufacturers are offering sharply discounted computers to buyers who sign up for Internet access; slowing in the rate of the company’s subscriber growth (in the quarter ended June 30, such growth in the U.S. failed to exceed expectations for the first time in years, and such growth abroad was decidedly nothing to write home about); and increasing evidence of price competition.
This last — gathering price pressures — Doug views as especially significant. For it was America Online’s ability to boost prices back in April 1998 that in no small measure provided the impetus for the stock’s remarkable sevenfold appreciation over the next 12 months.
Pure and simple, America Online has lost the power to control the price of its product. The cost of Internet usage has begun to decline, and the trend threatens (if you’re America Online) or promises (if you’re a consumer) to accelerate.
Among the rivals likely to cut Internet charges are such formidable ones as American Telephone. What’s more, Doug conjectures, there’s a very good possibility of Microsoft (MSFT) offering free access. Rick Belluzo, its new online chief, has already hinted at his willingness to lose money to gain market share.
Doug also sees broadband access as putting fresh pressure on America Online’s pricing. High-speed Internet connection, he predicts, will become inexorably more important to Web users, the way e-mail and chat rooms became more important. That will pose a problem for the company because it can’t hope to get its customers to shell out $20-$25 more each month, atop the $21.95 they’re already paying.
The company, in his view, will have no alternative but to roll back the ’98 price increase. And that will be especially bad news since it gets something like 75% of its revenue and 20% of its profits from subscribers’ access fees.

In the fullness of time, Doug expects the price of America Online stock to be cut in half.

UBS/PaineWebber Merger

"With PaineWebber becoming an integral part of the UBS Group, we are exceptionally well placed in wealth management in the United States as well as the rest of the world. The combination of PaineWebber’s client franchise and UBS’s product range unlocks immense opportunities for growth. Our two organizations are an excellent strategic fit."
-- Marcel Ospel, President and CEO of UBS Group

That same year, in July 2000, UBS (UBS) acquired PaineWebber at the beginning of the "Lost Decade. That deal, too, resulted in a huge writedown and occurred at a market top.

"This combination brings together world-class technical and manufacturing teams that promise to deliver best-in-class products at increased volumes for today’s systems while developing solutions for tomorrow."

JDS Uniphase/SDL Merger

-- Don Scifres, SDL Chairman

In late 2000, JDS Uniphase (JDSU) acquired one of its largest competitors, SDL, for $41 billion, again at the top of the Internet/technology bubble. In late 2001, JDS Uniphase wrote down $44.8 billion of assets.

In mid-2008, just before the collapse of commodities and before the biggest credit crisis since The Great Depression, CME Group (CME) bought Nymex, the largest physical commodities futures exchange.
As well, CME’s shares fell by about 60% in the 12-month period following the March 2008 $10 billion acquisition of Nymex.
There have been many other huge takeover boners since 2000 at cycle highs -- for example, Sprint (S)/Nextel, HSBC (HBC)/Household Finance, Royal Bank of Scotland (RBS)/Fortis, Banco Santander (STD)/ABN Amro and the list goes on and on.
The message for Deutsch Boerse, AOL and all the others?
Approach the euphoria surrounding increased takeover activity with some skepticism, as it often, in the fullness of time, ends up badly.

I’ve decided the caption for the photo of the burning policeman should be "Rush Limbaugh says I should pay for my own health insurance."

SDS/Amatta – 20 short March $24 puts at $1.70, now $2.70 (is that too hard to write?) and 10 June $20 calls at $3.50, now $2.50 and a mystery caller that was sold and bought back… Is that about it? The March $24 puts are now $2.50 so you made .20 while waiting. You are down $1 and you can roll them over to the Apr $21 puts at .85 so as long as that roll is there for you, no need to rush things. On the calls, I still like the roll to the April vertical as you take better advantage of a short-term sell-off and improve your position. I do not like selling short puts as it turns into a messy trade that you then need to keep adjusting. We just blew 800 on the RUT so watch the 1,300 line on the S&P but, otherwise – enjoy the ride.

P&L/Iflan – I’m not seeing it.

CVX/Rustle – Same as my comment on XOM above. They are selling 80% of the World oil at $110 a barrel. You think this is bad for them how exactly? The Middle East is way too unstable to start shorting oil here. It’s a sector you need to turn away from for now.

FNSR/Amatta – I’m not liking the way they look but I like them for a long-term growth story. Motley Fool just ran an article predicting they miss and that’s what’s driving them down at the moment. Maybe they will, maybe they won’t – it’s a gamble ahead of earnings and I’d wait.

Abdullah/Iflan – Yep, if only the kings in this country were that smart…

Chuckerd,
Uncle Ben will most likely be the first fed chairman to go into high school history books, he and Paulson have saved our collective asses from the depression we so richly deserve for allowing wall street teenagers to undercut the western world’s financial system. The republicans can thank them also since they can now hide behind the diving catch and along with Hoover preach fiscal restraint (i.e read that as the final destruction of Americas middle class) !

“The economy is in a much stronger position to handle” rising oil prices, Geithner said today during a Bloomberg Breakfast in Washington. “Central banks have a lot of experience in managing these things.”…“The economy is gradually getting stronger,” Geithner said today, adding “I wouldn’t get carried away with it.”

CMG/Amata – ROFL, you crack me up. You were getting killed but hung short on them and now you want to be a bull? How do you know how to play a stock if you don’t have an actual position in it that you believe in? I’m not saying you should never change your mind but, so far, they fell from a ridiculous $275 to a silly $240 – you want to go long back to ridiculous? If you are still in bad shape on your short calls, THEN it can be prudent to sell some puts but I think the April $200 puts ($3.50) at the most as they could easily fall below $200.

M&A/Rustle – Well we had a ton of M&A in 2006-2008 and they kept telling us what a strong sign that was and all it really did was prove that corporations are just as dumb as people when buying stocks.

Adjustments/Yshen – Yes, I am adjusting my chair and waiting PATIENTLY to see what happens. How about you?

IWM Exit/DC – It depends how bad you need the hedge. The $83 puts are $3.50 now so a nice, quick gain and it would be greedy not to stop out at $3.40 if we bounce back but once we hit $3.75, we can set a .20 trailing stop and, at $4, we can move it up to .25.

@Phil
If you want to see and hear of someone who takes more than his share of responsibility for the debacle that the Securitization of Mortgages became, watch the Faber report.
Lew Ranieri, the inventor of the MBS, is a standup guy in an ocean of, "Who Me?", monkeysl

Phil -
I have a large tza position that i have been getting crushed by for months.
I want to sell some calls against it – what strike in april would you be looking at?
The other way of asking this would be – where do you see support for iwm?

Amata, I like Phil/s remarks. Just let it rest I am in this play as well. I find as less you mess with it as better it gets.
I am short Jun 11 195p short Apr 250 c and Jun 260c hoping they land between these two numbers and i will never tough them again.
CMG/Amata – ROFL, you crack me up.

RUT/Tusca – I hate to tell you but I don’t know… We’re going to have to wait and watch. As a rule of thumb, if we break a major level, unless we are moving very fast in the same direction then I will wait to see at least two 10 minute candles fully form below that level before I consider it really broken. So that means, if you are not into candles, that I need to see at least 20 solid minutes where we stay 100% below the 800 line before I think of it as anything more than a blow-off spike down. If it helps – I try to think of myself in the future – looking back at today’s chart and how it would look and how the lines will be drawn if we go up down or sideways and then I think about which result makes the most sense.

Volume died at 98,000 on the Dow at 12:30 – that’s a good sign that maybe the BearBot finished it’s run. It could be resting, of course, waiting for a bit of a move back up before going all relentless again but, as I said – we won’t know which until we wait.

$99.95 oil! This is exciting!

Ranieri/Flip – Yeah, I’ve heard him. He is so sorry he ever came up with that idea.

Nice DC!

Gotta take the money and run on oil longs at $99.50 – .50 trailing stop is good here. I hope we don’t break $100 – that would suck for the World.

TZA/Samz – I’d sell the $14s for $1.30 and be thrilled to get another $1 locked in. You need another 2.5% drop in the RUT to pick up another buck – it’s not too likely and you can roll anyway.

Oil/Terra – I have no favorite way to play $150 oil other than to short the S&P and the Dow back 50%. You’d be talking USO $60 so just buy the July $44 calls for $2.10 and you’ll be rich, Rich, RICH while everybody else gets poor, Poor, POOR!

Phil – any suggestions on establishing a hedge? I have a lot of long exposure to precious metals (mostly silver), my concern is in case of a market drop they will suffer short term and I’d like to protect against that. I feel pretty strongly that both Ag and Au have a more upside potential.
I am still in the IWM puts but I’m hesitant to get out of them as I have no other good hedge right now. I did take some silver profits off the table, but still holding a pretty good size position. I have some (now far) OTM puts in metals to protect against a serious plunge, but nothing else.

Phil/CVX :
Bought CVX 2013 $80 C for $14.20 (now $26.10) and sold Jan 2012 $85 C for $9.14 (now $20.75) paired with sale of 2013 $75 P at $7.20 (now $4.45) for net $2.14 credit on $5 spread. With the surge in CVX, should I roll Jan. 2012 C to 2013 now to pick up $2.00 or wait until Jan. 2012 to roll? Thanks

Dow 12,100, S&P 1,300, Nas 2,700, NYSE 8,250 and RUT 800 are the watch levels for a bounce here. If we blow 3 of those, you’d better be bearish!

SSO March $53 puts at $2.70 perform the same function as the IWM puts did earlier. As stop at $2.50 makes these a good spot to play the S&P below the 1,300 mark (if it’s our 3rd red level).

Meanwhile, I am still hoping for a bounce here. The RUT is down 5% and could pop 1%, back to 805 and still be a weak bounce. The Nas also fell about 5% so back to 2,750 is their bounce zone. So we EXPECT those bounces and anything less is very bearish. The other indexes are pretty much hovering around 2.5% on the drop so IT’S NOT THAT BAD – Don’t get carried away…

Phil, Yodi,
CMG BULL? No, but I have hung tough on these but when I see such a selloff (learned from your sell into the excitment rule #1) then I am tempted because too many times I have seen a nasty bounce on these take away the gained ground. Like for example on earnings when they fell to 240 and then bounced all the way back to 270…. I was tempted then to sell some 210 puts but was gun shy and later regretted it.
Now on OPEN I did sell the March 85 Puts ($3.30 now $5.60) against my long April 85 puts ($4.30 now 7.30). Would you roll the short puts down or wait and see?

Oh no – now we had a TERRIBLE 5-year note auction? Day one of Glenn Beck’s 15-day countdown begins!

Hedge/Kurt – Yes, I have a hedging idea for metals…. CASH OUT YOU GREEDY BASTARD!!! Any questions? Seriously, I would take that silver money and run and, if you think you are going to be missing something, you can sell SLW 2013 $30 puts (now $40) for $5.40 and use that money to buy Jan $35/50 bull call spreads at $5.80 so your worst case is you own SLW at 25% lower than it is now (net $30.40) and your upside already $5 in the money with another $10 to go. In practical terms, if you were to agree to buy $30,400 worth of SLW (10 contracts sold short) then your upside if they hit 50 (up 25%) at next Jan expiration is $14,600 so you make a much on a 25% move up in silver as you would on a 50% move up and you lose 25% less than holding physical silver. I always prefer miners to the metals.

If you want to shoot for the moon, you can agree to buy GLD at $120 ($1,200 gold) in 2013, selling the $120 puts for $8.50 and then you can just buy the Jan $140/195 bull call spread for $9.05 and that puts you in the $55 spread for .55 with a 10,000% upside if gold goes to $2,000 an ounce and holds it to Jan expiration while your worst case is owning GLD at net $120.55, which is more than 10% below the current price. If you are not bullish enough for those trades – why on earth would you be sitting around with all your money ties up in shiny bits of metal?

CVX/Dflam – It’s still good protection but you may want to put a stop on the putter as you can always sell another one later but 50% up is very good money with 2 years to go. You could also consider taking the $26 off the table and buying 2x the Jan $110 calls ($5.55) to cover the Jan callers as they have the same upside delta as the caller and you can stop out 1/2 on the way down to flip the play beairsh and pick up money on a retrace.

Fun/Bob – You have a strange idea of fun with earnings coming up.

Adding/Tusca – Yep, now we can use it as a stop or something like the SSO play above.

OPEN/Amatta – Selling into the excitement is about events, not when the whole market is trending back one way or the other. On OPEN, that trade looks good to me. OPEN is at $82.61 so what would you do? Pay $3 premium to move the putter? That makes you the sucker buying the premium then… It’s right on target and until those short puts are below 25% premium, there’s not much to do. If you want to get more bearish – just buy another put.

MRK/Jbur – Now that is some patient fishing!

PCLN/Savi – I’d go for it but, since you are ahead. The wise thing to do is take money and run on the Apr calls because those can give you the most trouble and that gives you $6 more cushion on the July spread.

Ametta,
I am not in OPEN but looking at the position we now have two days of down market. Lybia seems to be playing a good roll in this game. Besides the oil stks most are down.The guy will lose his shirt in a few days and the market will recoup again. I would do nothing in the OPEN position. You have still 23 days to experation. So do not rush it. Still time to roll the play.

Phil. The AAPL play a while back I got in to the long Apr 255 but the Mar 250 I can not get filled. I set it below your suggestion of 8.20 to 7.85 it is now trading at 6.75 more than 1$ below. Even APPL is up the caller is going down very strange. What is your suggestion ?

Phil / El Erian So he thinks QE3 is possible but improbable. With $1 Trillion to invest can his views be trusted? If he’s right he would be shorting long bonds. Finally time to buy TBT? (oil certainly helps push the inflation rationale). Or, do we wait until the pomo runs out in June?

Phil/IBM – I have 8 April $155 calls long and 8 Mar $155 calls short for a net cost of $3011. In our last conversation you had asked me to turn it into the April $155/$160 vertical. I was wondering if now would be a good time for the roll. The Mar $155′s are now $6.80 and the April $160′s are $4.80, so a 12:12 spread?

TBT/Tusca – We started buying again yesterday. They are damned if they keep borrowing and damned if they don’t. Probably not any big action until POMO runs out but if you do a buy/write – what do you care?

Wow, those IWM calls are flying! Obviously all done on the short side with the RUT back over 800!

IBM/Nicha – I’d keep the protection for now. They still have 20% premium and it’s a bearish spread and we don’t know yet that things will recover. I think the rolling plan to the upside is first to spend $3.60 to roll them to the March $160s (all premium) and, when those are done, then to try to get your $3.60 back on a roll to the April whatevers.

IWM/Manimal – We’re just weak bouncing right now with 132M now traded on the Dow at 2:30 – not much past a normal day so we need to see some real action by the NYSE and S&P to get comfortable with a move up. A wise man said a weak bounce on the Russell could easily take us to 805 – that wise man was me at 1:01 so I’d listen to that guy – he’s good!

Let’s take that 805 line seriously as an inflection point – very greedy on the IWM calls already as .93 is up .27, which is 40% in a couple of hours so don’t blow that!

Phil, I’m impressed to see how accurately you calculate the bounces of a big up or down move.. that’s definitely an advantage. I’m trying to see if I can downgrade to Basic Membership at least so I don’t lose my discount rate for whenever I’m ready to be super active in the markets again due to my job.. I think that should be ok right? One or two quarters of basic membership before I can go back to premium (when my job project permits the time to be more actively in the markets). Otherwise I’d have to let my subscription go

Amatta, Yodi / OPEN. For what its worth I subscribe to a service that yesterday selected OPEN as its stock of the month and suggested buying on weakness. Service has done well (until today) with MOMO’s. Be forewarned.

Phil/CVX:
sold the 2013 BCS spread and the puts. Your voice of reason "up 50% with 2 years" to go convinced me,especially original position was opened in mid Dec. Like u say,there’s always another trade.

Phil, Similar to the SLW spread you noted above, you can sell the jan 12 45 puts for 3.1 and buyt the 45/50 bcs spread for 3 – essentially a break even. Would you do both the SLW and ABX plays in this craziness?

Jan. Existing Home Sales: +2.7% to 5.36M vs. 5.23M expected. Inventory of unsold homes on the market -5.1% to 3.38M; months supply 7.6. Median sales price -3.7% Y/Y to $158,800. "The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence," NAR’s Lawrence Yun says.

A five-year note auction at higher-than-expected yield has those notes reversing gains (five-year yield now near flat at 2.14%) and other maturities giving back some: 30-year yield -0.02 to 4.58%; 10-year -0.005 to 3.45%.

Without the government spending of the last two years, the economy would be in much worse shape, David Leonhardt contends, and the U.S. needs only to look to the disastrous examples of Germany and the U.K. to see that big federal cuts will not bring prosperity. The best solution would be to trade short-term spending for medium- and long-term cuts, he says.

Systemic risks are worse than before reform, and the biggest banks need to be broken up, KC Fed’s Thomas Hoenig says. Expanding the Volcker rule would help cleave operations that aren’t core to commercial banking; investors and institutions "have little doubt" that firms would be bailed out again when new trouble arrives.

Philly Fed’s Charles Plosser says the only thing holding him back from voting to shut down QE2 is fear of undermining the Fed’s credibility: "I supported continuation of the policy in January because it is generally a good practice for a central bank to do what it says it is going to do unless circumstances significantly change." If economic prospects brighten, he says he might reconsider.

Sheila Bair declares 2010 a “turnaround year” for the banking industry, but her FDIC says that its list of problem banks has grown to 884, or just over one in nine lenders. Total loans and leases fell slightly during the latest quarter, the ninth drop in the last 10 quarters.

A nationwide strike shuts down Greece as workers protest the government’s austerity program. Not limited to just public sector workers, this strike is seeing businesspeople also walking off the job. Greek unemployment is 13.9% with youth unemployment at 35.6% – something must give soon.

Protests over food prices and government corruption hit India, where tens of thousands march on Parliament ahead of next week’s budget announcement which is sure to contain measures to (try and) ease the burden of the surging cost of staples. India -0.64%.

Egyptians are about "to find out it’s a lot easier to eradicate your local dictator than feeding your population," says Jeff Rubin. With higher oil prices feeding directly into higher food prices, and the Middle East being the largest importer of food on the planet, $100 crude is not the boon it seems.

Libya’s Quryna newspaper reports an air force plane crashes near Benghazi after its crew bails out, refusing to carry out an order to bomb the city. Located in Eastern Libya, Benghazi has been controlled by anti-government forces for several days.2

Pounded yesterday and down further this morning, the grains stage a reversal to close green for the day. Might they lead equities? JJG+2.4%. CORN+3.3%. GRU+2.1%. Wheat took a beating yesterday and stands 17% below its peak of 2 weeks ago, but China may lend support to the market. China is a minor player in the global wheat trade, but the drought threatens to change that, at least for this year. Premarket: JJG-0.6%.

Saying "fighting inflation" is the government’s key task, Hong Kong’s Financial Secretary John Tsang vows to cope, even as the currency peg leaves the country’s monetary policy tied to the U.S. Hong Kong recently introduced its own TIPS. EWH is flat.

Slowing exports to Asia lead to Japan’s first trade deficit in nearly 2 years in January. A local economist contends the timing of the Chinese New Year distorted the figures, making February and March numbers key before any trend is discerned. Japan -0.8%. Yen -1.0%.

Oil prices may surge to $220/barrel if political unrest in North Africa halts exports from Libya and Algeria, Nomura Holdings says in a research note. OPEC spare capacity would be reduced to 2.1M barrels/day, Nomura forecasts, similar to levels seen during the Gulf war and when prices hit $147 in 2008.

Gregor McDonald debunks what he calls Spare capacity theory: the assumption among western bankers, policy makers, economists, and stock markets that OPEC producers can lift oil production at will, and, export all of that spare production to world consumers. OIL+3.6%. BNO+4.1%.

Rising oil prices risk a deflationary spiral in the U.S., not an inflationary spiral, Cullen Roche writes. Oil price increases are cost-push inflation, he explains, and for an economy still mired in a balance sheet recession, only gives the appearance of inflation in (highly visible) gas prices while creating deflationary trends in most (less visible) other assets.

Ireland relies on Libyan crude for 23.3% of its needs, besting even Italy (22%). No crisis yet as the Irish have 101 days of stockpiles, but it’s another issue for Fine Gael to flag before elections on Friday. EIRL-1.5%.

With most observers casually dismissing anything resulting from massive Irish opposition to the EU/IMF bailout, one wonders if anybody reads the papers anymore (i, ii, iii). Irish elections are on Friday.

The split at the BoE grows wider as minutes of February’s meeting show a 3rd member peeling off to advocate an immediate hike in rates. Short sterling futures plunge on the news before rebounding, but still price in multiple hikes by fall. Cable +0.6% at $1.623.

Recent hawkish talk could be setting the euro up for a fall. "Expectations for the ECB meeting (next week) are now enormous," notes Commerzbank, "that means that the risks for euro are pointing downwards … market participants are likely to be disappointed." Premarket: FXE+0.6%.

With a rate hike looking more likely in the U.K., Matthew Russell argues using inflation expectations as a policy guide makes little sense – they’re often wrong. With wages in check, bumping rates to combat an increase in raw materials prices is likely to put an even larger squeeze on the consumer and the economy. FXB+0.6%.

A federal judge upholds the constitutionality of the healthcare reform provision requiring individuals to maintain health coverage or pay a penalty. It’s the third ruling in support of the law, following two rulings against.

Gang of 12 Alert: An investigation into the South Korean "flash crash" last November pegs Deutsche Bank (DB) as the culprit, referring 5 employees to prosecutors for engaging in price manipulation and unfair trading.

Lloyd Blankfein (GS) warned against raising base salaries on Wall Street less than eight months before his own more than tripled to $2M.

Hewlett Packard’s (HPQ-11.2%) revenue miss may be signaling a bigger problem: Apple (AAPL+1.1%) is eating its lunch. Anton Wahlman’s anecdotal evidence at the largest electronics store located near HP’s headquarters: "It offered numerous HP and other laptops with terrible merchandising, including no Internet connectivity, no batteries, and often missing or incorrect price tags or spec sheets."

Ford (F-2.2%) will recall nearly 150,000 F-150 pickup trucks in the U.S. and Canada to fix air bags that could deploy without warning. A mistake in the assembly of the trucks at its Norfolk, Va., plant could cause an airbag wire in the steering wheel to short circuit. The F-150 is the flagship of Ford’s popular F-Series pickup trucks.

CVX/Dflam – Good man! Note the process on the $25KP – make money, get cash, try again…

PCLN very exciting on earnings day.

ABX/Trad – I assume you mean the ABX play, right? Yes, I like owning ABX at $45 so no real downside but I find $45/50 ($5 spread) not very sexy and I’d rather wait for a pullback on ABX to enter. If Gold breaks $1,500 – then I’ll feel different but for now HMY remains a better deal.

OPEN/Yodi – What do you mean? I’m not bullish on them at all….

ATTN KURTWW:

Calling the silver market the "Vegas Strip for the 2-and-20 set," Josh Brown warns potential buyers to know who is long this market right now – quick trigger hedge funds and the "Bernanke is printing us into oblivion" crowd. SLV+1.1%. SLW+4.1%.

Iflan,
cc: Phil
Bought back my AAPL Feb 25 $350 callers at nice $8k gain. With AAPL now facing a potential retrace of its gap down yesterday, I did not want to keep a short position. AAPL bench looked real good today in the stockholders meeting.

OK, so we’re down 1.2% on the Nas and 0.88% on the Dow and .61% on S&P, 0.4% on NYSE (interesting) and 1.64% on the RUT. Seems like my premise of going with large caps now is the way to go but better if they come down a bit first.

Skiing/Cap – Have fun – Conditions have been great.

PCLN – I don’t know how they could have lived up to expectations at that price.

Valero Energy (VLO-1.5%) reportedly is in talks to buy Chevron’s (CVX+2.1%) U.K. refinery for $1B-$1.5B, and an agreement could be reached as soon as next month. Chevron is selling refineries to cut debt and redeploy spending to higher growth regions, and Valero has said it is looking at refineries in Europe that would add shareholder value.

As home prices hit nine-year lows, upbeat results from Lowe’s (LOW-1%) and Home Depot (HD-1.7%) indicate that homeowners are spending more on renovations. Lowe’s says Q4 profit rose 39% as shoppers spent slightly more per visit. "Consumers continued repair and maintenance projects," Lowe’s CEO Robert Niblock says. "They’re pursuing great value and great deals."

XRT - SPDR S&P Retail ETF – Options traders are positioning for shares in the Retail ETF to fall substantially in the coming months. Massive bearish bets popped up on the XRT in the first half of the trading session with shares slipping further from last week’s new highs. The familiar outline of a put butterfly spread unfurled in the March contract, but was preceded by a large debit put spread initiated in the April contract within the first 15 minutes of trading. Pessimistic players are perhaps speculating that consumers, who now face heftier prices at the pump, are likely to tighten their grip on discretionary dollars going forward. Shares in the XRT, an exchange-traded fund designed to track the performance of the S&P Retail Select Industry Index, are currently down 2.4% at $48.02 as of 12:00pm in New York. In the past week shares in the ETF have pulled back 5.1% from an all-time high of $50.61 last Wednesday. One big put player is well-positioned to benefit from additional weakness in XRT shares in the near term. The investor purchased 20,000 puts at each of the March $46 and March $42 strikes, and sold 40,000 puts at the central March $44 strike, all for a net premium of $0.22 per contract. The net cost of the pessimistic play pales in comparison to the $1.78 per contract in maximum potential profits the investor enjoys if shares in the ETF drop to $44.00 ahead of March expiration. Meanwhile, the buyer of a 17,000-lot April $44/$47 put spread for a net premium of $0.57 per contract could walk away with up to $2.43 per contract in profits if shares in the fund slip beneath $44.00 by April expiration. Options implied volatility on the Retail SPDR has been on the rise throughout the trading session, and currently stands 12.6% higher on the session at 27.35% in early afternoon trade.

Phil – just read the article ‘Don’t Just Do Something, Stand There!’. I wish I had read it this morning as I was freaking out all day about my positions because I am not properly hedged. I am ok now I think after buying the IWM puts.
Btw, who is OptonSage?

Don’t really understand what all the hoopla is about PCLN is anyway. I got burned by Captain Kirk once and will never use them again, for anything. When I wanted two airline tickets to Santa Barbara ( for my wife and daughter to meet me there) the bot offered me two to the nearest destination CLOSEST to S.B. since there were none on the date needed. I purchased the tix not knowing that they might even do something like this (being a first time user), and the tickets were for LAX. Needless to say, my wife was not into driving round trip LAX to S.B for a weekend visit. No refunds, no changes, no allowances whatsoever. So I lost a quick grand. I can’t wait to short the sh$t out of this stock. Oh, wait a minute, I’m not supposed to let my emotions into my trading activity!

We’ve lost roughly 300 points in 2 days, crazy sh!t going on everywhere and pcln pops on those numbers!?!?! I think you can throw pcln in with cockroaches as two things that’d probably survive a nuclear blast!

CEO Jeffery Boyd remarked, “High gross travel bookings growth rates were the result of continued penetration of new markets, like Asia-Pacific and South America, where economic growth and rapid online adoption are tailwinds for the business, and solid growth in core markets in Western Europe and North America. The Group’s air and rental car businesses also performed well under challenging market conditions and TravelJigsaw has made good progress with platform and website enhancements to grow our international rental car business.”
For the current quarter, the company sees revenue in a range of $753 million to $782 million, and EPS in a range of $2.34 to $2.44. Analysts have been modeling $742 million in revenue and EPS of $2.30.
That is based on the company’s expectation it can increase total gross travel bookings by 45% to 50% in the quarter. International bookings are expected to rise 64% to 69%.

Phil – thanks for your suggested trade on GLD. I like that strategy, though I don’t really care for GLD. I’d prefer futures options. I looked at a similar trade in GC for Jan ’12 and it looks like the cost is around $80 (minimum 100 oz) instead of $55 (minimum 10 oz). The spreads are really wide in that, so I need to see if I can set up a spread trade and just put in an order to split the bid/ask, or just do them one leg at a time (it’s not that volatile). Do you see any issues with that? Do you suggest something similar for silver?
To give you an example of what I currently have, an option on Apr ’11 32 SI. This was $.6 about a week ago and is now $2.23 (I believe, not getting an active quote). Do you suggest I sell an Apr 30 put and perhaps an Apr 40 call or something to reduce my risk at this point? Or sell it and get something else?
As to your other point, this is all happening in my trading portfolio. I am 100% cash in my long-term investment account because I fired my old "investment adviser" and haven’t had the time to focus on investing that with all the excitement in my trading account. I do have some physical metal against a TSHTF scenario (and general inflation), but I want to contain the risk as well. I do think the article you linked misses some of the fundamental reasons silver is going up (without going into crackpot conspiracy stuff).

Phil,
The failed auction has me concerned that I am not adequately protected for a significant dollar collapse. QE3 seems like it will probably happen, which only makes things worse. I have some of the inflation hedges you have recommended in the past, including some aggressive TBT plays. I’ve been reading a lot of Tyler’s posts on ZH, and that site keeps talking about buying silver/gold. I know that you believe commodities are significantly over-valued, and are overdue for a pullback. Hyper-inflation is very concerning, and I want to make sure I am well positioned if it actually happens.
Can you give me your thoughts on the subject?
Thanks.

There’s that GROWTH again. Significant International Market Think GROWTH! I also see Domestic Increases, Higher Performance Margins, BUSINESS Spending… All in all, looks like a very good CC so nothing to short here. I wouldn’t panic if you are already short but there’s no reason to pick on these guys because, if they hit their growth targets, that 40 p/e is going to start to look reasonable.

AAPL/High – Good call I think. Now they have something set for early march too so they should hold up as long as the Nas doesn’t crash and take them for the ride.

Good guess Rain! Dollar getting jammed down even more overnight – 77.23 now so that can pop the futures as prices struggle to keep up with declining Dollar. All about getting oil to $100 I think.

PCLN/Jabob – Tempting but conf call (above) says leave them alone.

Sage/Nicha – Option Sage (Gareth) is the guy who wrote or co-wrote our education section with me, as well as the Options Guide Book at the top of the page. He isn’t here too much now, he runs Market Tamer, which teaches options basics (link on top right of our page).

PCLN/Jbur – If I were still in college I would be happy to accept the hassles in exchange for cheap fares but I find them useless and I have made several attempts to use them. Even trying to book a hotel is annoying unless you just don’t care where you end up. Once upon a time I used to randomly get on planes with no particular plans to explore strange cities but now I’m lucky to get a 3-day weekend and I don’t have time for nonsense. The moderation thing was you must have sounded like a travel ad or something. Our spam filter is a little strange but it does an amazing job overall.

LOL Jabob – That would explain it.

Silver/Kurt – I don’t even see any traded options for /SI. /GC also very thin. I don’t have a problem with GLD as they track gold very, very well over time.. Selling a put does not reduce your risk, just your cost. On the whole, if you have a bullish spread and sell puts, you are taking on much more risk. I was saying I prefer those to sitting on the physical metal as the margins are reasonable and you get nice leverage. I know there are lots of good reasons to use metal to hedge against the collapse of the dollar but, if the dollar collapses, if you don’t have it in your safe they will just declare "force majeure" as they just did in Europe, and your contracts will be canceled and you can call your broker to complain but they will be as gone as Lehman Bros most likely. I do not think it’s all going to fall apart and, even worse for metal heads – I think the more it falls apart the faster people will run to the buck and, just like they did in 2008 – both gold and silver will drop just like shiny little rocks along with everything else so please, be careful!

Boomers/Nicha – That’s not news. It’s a catastrophe but not news…

Collapse/Palotay – See above. I put up one SLW and one GLD play earlier and you can play that way but I prefer ABX and HMY to owning actual gold overall because at least you have a business left when the market collapses. We haven’t looked at CCJ in a while because they got too expensive but I’ll be liking them again if they either fail the 50 dma here at $40 and come down to the low $30s or if they hold the 50 dma and turn up, I’ll still like them.

Right angles/Doro – I think that’s just the way they present it to make it look nicer. It does seem to link words near each other that are used together but I couldn’t find a summary of their methodology – apparently it’s some sort of proprietary IBM thing where they are just showing off their back-end computing power – which is very impressive when you jam 50 pages into this thing and get a cloud in a couple of seconds…

Some key pieces worthy of reasonable review were the jackups taking quick nosedives; WYNN, RCL, CAT, DE as examples and even IBM bounced hard at the close on serious dump handle volume in the last 20 seconds off the 160 mark

it was interesting to note the drop back to the post Egypt mark for the grindup stalwarts in the non Dodd Frank regulated areas (e.g., insurers PRU, LNC, ALL) until the smallish noon ppt shot and then only had a small amount of degradation from there

while I do not think this is the big rug pull, I am inclined to believe this will be the one we figured for January three weeks later and I think it keys off of what Phil pointed out which was no Fed juice following expiration week

i agreed with the AAPL move unless the options market is completely nutty (bought the shares today at 340), but very puzzling on the financials, darn little move in the summer options for 5-8% drops???

a lot of runup buyers sure don’t want to get stuck and i am leaning to seeing 1275 (40 more than what Jan would have done given the Feb pushup) before we see the next top off at 1385 come mid-late April to mid late May; HP’s comeuppance will nibble at the edges more because of how ingrained the whole PC universe has been until the I-Pad

this deal is engineered; give the market it’s year end close less 50-60 points in the spring, lather, rinse, repeat which has indeed come to represent modern day stock market "investing"…

notice the reits didn’t get much of a haircut either day, while the 5 yr note saw less direct bid by a factor of three, again, why?

Sector Performances (Today)

Thermal Imaging

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